Cie Automotive, one of Spain’s largest auto parts makers, is placing a big bet on the booming biofuels market.
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The Basque company hopes to acquire producers of biofuels and its feedstock around the world in the medium term to expand its business in an area where it sees tremendous growth potential.
“It is our intention to expand in biodiesel, which is an area where we have experience and where there are huge growth opportunities,” a Cie spokesman told just-auto.
Cie believes its business and the biofuels industry share big synergies.
“We make engine parts and components and we can combine our technological know-how with biofuel companies to improve the fuel’s quality and production processes,” the spokesman said.
Cie will first look for acquisitions in the burgeoning European biofuels market, then in emerging markets where it has a strong presence. It will also focus its incursion on biodiesel rather than ethanol.
“We believe that the European car market is going to run fundamentally on diesel,” the spokesman said. Cars need big and complex engine retrofits to run on ethanol while biodiesel requires few modifications, making the latter a more viable expansion road for Cie, he added.
The EU’s new mandate requiring 5.75% of future transport petrol to incorporate biofuel blends by 2010 has unleashed a biofuels craze in the continent.
Governments around the world are implementing similar legislation to cut their CO2 emissions and curb their crude-oil dependence.
Cie’s revelations come after the company bought 70% of Spanish biofuels company Bionor for EUR26.6m last week.
Under the deal, Cie plans to back Bionor’s plans to invest EUR100m to build five biodiesel plants which will churn out 445,000 tonnes a year by 2008.
Cie, which has 34 factories around the world, plans a 5-to-1 (five new for each old share) stock split in coming months to raise its capital by 20% and increase its stock’s free float to 35%.
Ivan Castano
